1MDB, whose advisory board is chaired by Prime Minister Najib Razak, is also being probed by other authorities

KUALA LUMPUR—Malaysia’s central bank said Thursday it has completed an investigation into debt-laden 1Malaysia Development Bhd, or 1MDB, and submitted a report recommending “appropriate enforcement action” to the country’s chief prosecutor.

The troubles faced by state investment fund 1MDB, which has racked up more than $11 billion in borrowings while facing a cash crunch, have in part weighed on the country’s fiscal health because of a government guarantee on some of its debts, and on Malaysia’s ringgit, which recently slumped...